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One year risk-free rate with continuous compounding

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Currently, Gold spot market price is S0Explain why there is no arbitrage profit. = $1,600/ounce. The one year gold futures on NYMEX trades for F0,1 = $1,724.614641/ounce while the one year risk-free rate with continuous compounding is 7.5%. (Assume that all costs associated with the gold are taken into account in the given borrowing rate.)

Reference no: EM133061405

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